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On the Consumption Insurance Effects of Long-term Care Insurance In Japan: Evidence from Micro Household Data

Author

Listed:
  • Yasushi Iwamoto

    (Faculty of Economics, University of Tokyo)

  • Miki Kohara

    (Osaka School of International Public Policy, Osaka University)

  • Makoto Saito

    (Faculty of Economics, Hitotsubashi University)

Abstract

Using micro-level household data in the 2001 Comprehensive Survey of the Living Conditions of the People on Health and Welfare as compiled by the Japanese Ministry of Health, Labor and Welfare, this paper examines how having a household member in need of long-term nursing care can result in welfare losses measured in terms of consumption. In doing so, the study evaluates the role of the public long-term care insurance scheme implemented in Japan in April 2000. The results indicate that when households included a disabled family member, household consumption net of long-term care costs did not decrease as much as before the introduction of long-term care insurance. When compared with the surveys conducted in 1995 and 1998, the adverse effects on consumption net of long-term care costs have became much weaker. These findings suggest that the introduction of social insurance in 2000 helped to reduce the welfare loss associated with having a disabled family member.

Suggested Citation

  • Yasushi Iwamoto & Miki Kohara & Makoto Saito, 2006. "On the Consumption Insurance Effects of Long-term Care Insurance In Japan: Evidence from Micro Household Data," CIRJE F-Series CIRJE-F-443, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2006cf443
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2006/2006cf443.pdf
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    References listed on IDEAS

    as
    1. Stefan Dercon & Pramila Krishnan, 2000. "In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 688-727, August.
    2. Amy Finkelstein & Kathleen McGarry & Amir Sufi, 2005. "Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance," American Economic Review, American Economic Association, vol. 95(2), pages 224-228, May.
    3. Sloan, Frank A. & Thomas J. Hoerger & Gabriel Picone, 1996. "Effects of Strategic Behavior and Public Subsidies on Families' Savings and Long-Term Care Decisions," Working Papers 96-01, Duke University, Department of Economics.
    4. Olivia S. Mitchell & John Piggott & Satoshi Shimizutani, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," NBER Working Papers 10882, National Bureau of Economic Research, Inc.
    5. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-168, February.
    6. Hans G. Bloemen & Elena G. F. Stancanelli, 2005. "Financial Wealth, Consumption Smoothing and Income Shocks Arising from Job Loss," Economica, London School of Economics and Political Science, vol. 72(3), pages 431-452, August.
    7. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
    8. Gruber, Jonathan, 1997. "The Consumption Smoothing Benefits of Unemployment Insurance," American Economic Review, American Economic Association, vol. 87(1), pages 192-205, March.
    9. Wagstaff, Adam, 2005. "The economic consequences of health shocks," Policy Research Working Paper Series 3644, The World Bank.
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    Cited by:

    1. Tomoaki Yamada & Minchung Hsu & Gary D. Hansen, 2011. "Financing Health Care in Japan: The Impact of an Aging Population," 2011 Meeting Papers 717, Society for Economic Dynamics.

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